Mexico Chemicals 2014

Mexico Chemicals 2014 

PRE-RELEASE 

EDITION

MEXICO CHEMICALS PRE-RELEASE 

2 Global Business Reports // MEXICO CHEMICALS PRE-RELEASE 

November 2014


Mexico Chemicals: 

Building A Better Future 

The country’s chemical sector prepares itself for a new era of the Mexican economy 

Introduction: Recovery continues 

as structural reforms spur optimism 

In the wake of Mexico’s historic approval of structural reforms at the 

end of 2013, the Mexican market has been frenzied with optimism 

and growth projections. President Enrique Peña Nieto’s success in 

pushing through this reform package is certainly one worth celebrating, 

and now that the reforms have been approved, the business 

community is more clearly evaluating its opportunities across sectors. 

For Mexico’s chemical industry, the opening up of the country’s 

oil and gas sector could be the game changer. 

Declining since the 1990s, the Mexican chemical sector has struggled 

under the weight of Pemex and international competition. As 

Mexico’s economy is the most linked to that of the United States 

among Latin American countries, the country has also been the most 

affected by the US recession. Yet over five years on, Mexico has taken 

the lead in regional growth as its fellow powerhouse Brazil enters 

a recession. Upstream private investment spurred by the reforms 

could create downstream benefits to place the Mexican chemical 

market more firmly on the map. 

“Mexico has developed quite well since the crisis; we suffered perhaps 

the most in Latin America due to our proximity and close relationship 

with the United States, but this also helped our companies 

to make the most of our resources and become stronger,” said Fernando 

Hernández, head of country services for Clariant. 

In the context of the wider economy, the past two years have 

seen relatively low growth in Mexico, with a GDP growth of 1.1% 

in 2013 and a forecast for 2014 that was downgraded from 3%/4% 

to 2.3%/3.3%. Brighter prospects for the year ahead are being 

boosted by the country’s strong sectors like automotive and 

food and beverage, markets which are prime targets for chemical 

consumption. 

Strong demographics, with over 52% of the population under 25, 

and a growing middle class present robust growth opportunities 

going forward. “Mexico’s GDP growth for 2015 is estimated to be 

around 3.8% in a market of 120 million inhabitants, with flourishing 

industries in many sectors,” said Carlos Orbegozo, director of Merck 

Millipore Mexico. 

Amidst the backdrop of relative economic growth, the Mexican 

chemical sector has posted encouraging numbers following nearly 

two decades of decline. Apparent domestic chemical consumption 

in Mexico has risen steadily from $33.7 billion in 2011 to $35.7 billion 

in 2012 and $37.1 billion in 2013. National production has not kept 

pace; however, after dips in 2011 and 2012, Mexico finally regained 

2010 levels in 2013 with an output of $17.6 billion. 

This incremental growth in chemical production has not been sufficient 

to stem the tide of Mexico’s growing trade deficit. The chemical 

sector’s trade balance hit a five-year low in 2013 with imports of 

$31.3 billion and exports of $11.8 billion. While exports have made 

a net increase in the last five years, this gain has not kept up with 

imports coming in to meet growing domestic demand. 

November 2014 Global Business Reports // MEXICO CHEMICALS PRE-RELEASE 3


Fernando Hernández, 

head of country services, 

Clariant 

lenge to the industry threatens, as domestic 

producers must soon contend with chemical 

capacity expansions underway in the United 

States. Mexico’s government will have 

to fine-tune its policies toward the chemical 

sector to ensure adequate incentives bring 

in international players and bolster domestic 

companies. 

“With the coming of this new government 

we thought that there was going to be 

recovery, nevertheless, in the first year 

we have seen the opposite,” said Juan Manuel 

Díaz, president of the chemical sector 

for CANACINTRA. “If there is no activation of 

the internal market, it will be very difficult for 

the industrial sector to maintain its position.” 

Can Mexico’s Structural 

Reforms Revive Chemical 

Manufacturing in Mexico? 

Industry leaders are hanging hopes on the 

reforms providing the much needed impetus 

to bring manufacturing back to Mexico. In 

the future, the opening of the energy sector 

is expected to have a twofold impact on 

chemical production in Mexico as manufacturers 

count on energy and feedstock prices 

decreasing. “The government reforms will 

bring Mexico back to the production levels 

witnessed during the late 1980s and early 

1990s, when Mexico was the seventh largest 

petrochemical producer in the world. Al- 

Chemical synthesis and blending manufacturing capabilities at Grupo Polak’s Tlaxcala facilities. Photo 

courtesy of Grupo Polak. 

“With over $30 billion of raw materials imported, 

the chemical sector is still active 

but is less integrated. Because Mexico’s 

main export markets are in North America 

and Europe, which are the most effected 

by recession, Mexican exports have stayed 

at the same level,” explained Gilberto Ortiz, 

vice president of energy within the chemical 

sector for industry association CANACIN- 

TRA and general director of law firm Gilberto 

Ortiz y Asociados. 

With the promise of Nieto’s approved structural 

reforms, the chemical sector is hoping 

for its recovery to accelerate. Expectations 

will have to be tempered, however, as investors 

remain in wait-and-see mode regarding 

downstream developments. A further chalthough 

it may take five to ten years, reaching 

growth of 5.5% within the petrochemical industry 

is certainly possible for Mexico,” predicted 

Miguel Benedetto, general director of 

Mexico’s largest chemical association ANIQ. 

Already rising labor costs and increasingly 

strict environmental regulations in China 

have brought manufacturers back to North 

America. “Many companies that moved operations 

to China are now returning to North 

America. Mexico offers a viable option for 

businesses. The Mexican workforce is highly 

competitive in cost and quality compared 

to Asia. There are also significant logistical 

advantages in Mexico when serving the US 

market,” said Herwig Bachmann, general director 

of Evonik Mexico. 

Yet optimism remains cautious regarding the 

impact of the structural reforms. Industry 

leaders have voiced concerns that the downstream 

implications of the energy reforms 

are not well defined and international companies 

have yet to confirm investments in refining 

or petrochemical processing capacity in 

Mexico. “The only difference between promises 

of the past and this current plan for reform 

is that there is judicial reform accompanying 

these policies; however these reforms 

are still partial and are open to misinterpretation. 

The impact may not be as drastic as 

many people might imagine,” said Gregory 

Polak, general director of Grupo Polak. 

With a slew of cracking facilities slated to 

come online in the United States starting 

in 2017, Mexican producers will have to 

cope with regional competition made fierce 

by US shale gas prices. According to reports 

by Bloomberg, global chemical manufacturers 

are investing a record $72 billion in 

US facilities. “The new energy reform will 

help remedy some of the problems with 

Pemex but there is a risk that this shakeup 

has come 20 years too late. Now that the 

United States is well on the path to becoming 

a major shale gas producer and petrochemical 

hub, there may be much lower 

demand for Mexican products,” said Alfredo 

Ison, general director of chemical distributor 

Química Delta. 

In this context, competitive reindustrialization 

is a top priority for the industry. “There 

is a list of about 3,000 products that are no 

longer manufactured in Mexico and we need 

to bring them back to the country,” said Ortiz 

of CANACINTRA. 



Through a CANACINTRA committee established 

to study Mexico’s lost production 

chains, the association has determined the 

country has competitive potential to recover 

production in gas and natural gas derivatives, 

oil derivatives, and natural products. “Most 

importantly we need to develop refining capacity 

to develop oil derivatives to support 

downstream manufacturing. This would give 

us competitiveness again, but since there is 

an excess of refining capacity in the United 

States there is not short-term interest. We 

have hopes for more interest in refining in 

the longer term,” said Ortiz of CANACINTRA. 

As the impacts of the structural reforms will 

first need to trickle down from upstream 

developments, benefits to chemical companies 

will arrive in the medium to long term 

and have the potential to be diluted. “It is 

important for companies in the country not 

to rely on these reforms for increased business 

alone; they must continue to improve 

their standards so as to keep up with an 

evolving global market,” counseled Hernández 

of Clariant. 

Internal picture of a portion of Evonik’s warehouse operation. Photo courtesy of Evonik Mexico. 

Mexico deepens its ties 

with the global economy 

Mexico’s trade advantages are only set 

to multiply as the structural reforms come 

to fruition. The chemical market has been 

radically affected by the 1994 signing of NAF- 

TA, which brought a flood of foreign-made 

chemical products into the market. 

The facilitating of trade between the United 

States and Mexico put pressure on domestic 

chemical manufacturing, while also opening 

its borders with the largest global economy. 

“Twenty years ago we integrated our country 

into the global market and opened our 

borders to foreign trade by signing the North 

American Free Trade Agreement. Since that 

time, we have multiplied our exports by seven 

and FDI inflows have increased fourfold,” 

said Ildefonso Guajardo, Mexico’s secretary 

of the economy. 



Bright outlook for 

Mexican chemicals 

Miguel Benedetto, director general of 

ANIQ, discusses the growth potential 

of Mexico’s chemical sector 

Please begin by telling us about ANIQ 

and the main milestones that have occurred 

since its inception? 

ANIQ was founded in 1959 and has grown 

to 240 members that represent over 95% 

of the companies that produce and distribute 

chemicals in Mexico. ANIQ divides the 

chemical industry into 19 unique sectors 

and the largest of these sectors are synthetic 

resins, synthetic fibers, pigments and 

dyes, fertilizers, and adhesives and sealants. 

The primary role of ANIQ is to lobby the federal 

government in order to increase competitiveness 

and contribute to the development 

of the industry. ANIQ also provides 

training to those involved in the chemical 

industry, and trains between 4000 and 5000 

people annually in areas such as safety, environment, 

energy, foreign trade, and union 

relationships. As the characteristics of the 

chemical industry are particular, ensuring 

safety is a primary objective for ANIQ. Internally, 

ANIQ has the largest staff of any association 

in Mexico with over 80 employees 

and has three different sites that we operate 

from, including a training facility. 

The government’s recently approved 

structural reforms are expected to improve 

the climate for petrochemical manufacturing 

in Mexico. What are the key 

factors making this possible? 

This prospect of growth is possible thanks 

to three contributing factors: the availability 

of feedstocks, the price of feedstocks, 

and the geographic positioning of Mexico. 

Mexico still has an abundance of feedstocks 

available that are competitively priced. Second 

only to the Middle East, Mexico has 

the most competitively priced feedstocks in 

the world. The availability and price of feedstocks 

paired with Mexico’s ideal geographical 

location opens a world of possibilities 

for petrochemical producers and all those 

involved in the chemical industry. 

In addition, the government reforms and the 

opening of Pemex will allow for a large substitute 

of imports and a rapid development 

of technological capabilities. Currently over 

80% of the requirements needed for petrochemicals 

are being imported into Mexico. 

National production will increase as a result 

of the reforms and the country will become 

more self-sufficient. In addition, new international 

players that partner with Pemex 

will bring new technologies and capabilities, 

which will allow Mexico to exploit resources 

that until now have been left alone. 

Small- to medium-sized organizations 

make up a large majority of the Mexican 

economy. In addition to working with 

large multinationals, does ANIQ collaborate 

with these small organizations? 

Approximately 50% of ANIQ’s memberships 

are small- to medium-sized organizations 

and 55% of the members are funded 

by national capital. Currently the chemical 

industry in Mexico employs 60,000 people. 

ANIQ forecasts that during the next 10 years 

this number will double to 120,000 people, 

a large percentage of which will remain in 

these small to medium-sized companies. 

How do you expect that ANIQ will transform 

in the next five years? 

ANIQ’s current members consist solely of 

chemical and petrochemical companies. 

Moving forward, it is expected that ANIQ 

will begin to offer services for the oil and gas 

community. This will attract new members 

and will expand the focus of the services that 

we currently offer. Lobbying in the Mexican 

oil and gas sector has been limited to Pemex, 

but in the future, ANIQ will aim to lobby on 

behalf of these new members, which will further 

develop our capabilities internally. 

Mexico has gone on to further develop its 

trade links by signing numerous free trade 

agreements with other global trading powers. 

“Mexico currently has 44 free-trade 

agreements (FTAs) with numerous countries 

all over the world and participates in FTAs 

with every Latin American country other 

than Brazil. Most recently Peru, Chile, and 

Colombia have entered into FTAs with Mexico, 

and Mexico is currently in discussions 

with Turkey in order to build this relationship,” 

said Benedetto of ANIQ. 

In the wake of NAFTA, Mexican companies 

were quick to take advantage of its trade 

partners to the north, although arguably at 

the cost of its trade ties with the rest of Latin 

America. With the 2012 signing of the Pacific 

Alliance, a trade bloc consisting of Mexico, 

Chile, Colombia, and Peru, Mexico is refocusing 

on synergies to its south. The group, 

which aims to integrate all of its respective 

trade agreements, agreed early on in negotiations 

to the immediate elimination of all 

tariff items for the chemical sector. “Mexico 

was very important in commercializing petrochemical 

products in South America; however 

with NAFTA Mexico has shifted its trade 

focus. Now the government is taking steps 

to reestablish trade with South America with 

the Pacific Alliance to strengthen relations,” 

said Ortiz of CANACINTRA. “Because Mexico 

is not a part of the Mercosur bloc, we 

have to gain more confidence in the Latin 

American market.” 

Looking across the Pacific, Mexico has 

also taken an active role in negotiating the 

Trans-Pacific Partnership, an initiative to 

sign a free trade agreement between countries 

in Asia Pacific and North and South 

America, including Canada, the United 

States, Mexico, Chile, Peru, Australia, New 

Zealand, Malaysia, Singapore, Vietnam, 

Brunei and Japan. ANIQ has participated 

in these talks, lobbying on behalf of the 

industry for the proposed elimination of 

tariffs between member countries for manufactured 

products including chemicals, 

plastics, scientific instruments and electrical 

machinery. 

Petrochemicals 

Unlike oil and gas exploration and extraction, 

petrochemical manufacturing in Mexico has 

already been opened to the private sector. 

Private sector involvement has been limit- 




ed to secondary processing, however, with 

basic and intermediate production being 

handled by state entities. Despite the open 

market, which has led to a Unigel-Pemex 

petrochemical partnership and now a massive 

Braskem Idesa ethylene joint venture, 

foreign companies have been wary of surety 

of supply over the years. “The difficulty before 

was that foreign petrochemical companies 

were not totally confident that Pemex 

would be able to supply them with raw materials,” 

said Ison of Química Delta. “Now 

we hope that the predicted heavy investment 

upstream will help boost confidence 

and attract investment further downstream. 

Mexico needs this new capacity because the 

country currently relies overly on imports to 

meet domestic demand for gasoline.” 

José Luis Uriegas, 

general director, 

Grupo Idesa 

Mexico’s first major petrochemical 

investment in 20 years advances 

With over 60% of the requirements needed 

for petrochemicals currently being imported 

into Mexico, the decision by Brazilian petrochemical 

player Braskem and Mexican chemical 

company Grupo Idesa to invest in a $4.5 

billion polyethylene facility is a much-needed 

step towards correcting Mexico’s raw 

material deficit. “As of today, Mexico is importing 

1.3 million mt/y of polyethylene. The 

production capacity of the Braskem Idesa 

plant, Etileno XXI, will be 1.05 million metric 

mt/y, which will help Mexico to substitute 

its imports with local production, particularly 

imports coming from North America. This is 

convenient for local customers, who are able 

to have closer technical support and rely less 

on inventory,” said José Luis Uriegas, general 

director of Grupo Idesa. 

The Etileno XXI project will need secure 

access to competitive raw materials, a risk 

which Brakem Idesa has managed to mitigate 

with a government commitment to 

supplying ethane over the long-term. “This 

was by far the most important ingredient in a 

project such as this. You cannot invest close 

to $5 billion in a project without the complete 

insurance of the supply of competitive raw 

materials,” explained Uriegas. 

While certainly a positive step forward, Braskem 

Idesa’s Etileno XXI project is not a silver 

bullet. Growing petrochemical demand will 

be too great to be satisfied with one facility, 

albeit it of this scale. “Although there will be 

new production plants set up to create raw 

materials domestically, such as the Braskem 

Idesa project, imports will continue to be vital 

for Mexican producers,” said José Carlos 

Tapia, general director of chemical distributor 

Trichem. “Mexico will continue to be a net 

November 2014 

Global Business Reports // MEXICO CHEMICALS PRE-RELEASE 

7


GPB’s Investigation and Development staff is a team with wide experience on etoxilation and propoxilation processes development; they have created innovative 

technologies for the production of Hydroxyethylcellulose, synthetic lubricants, and polyalquilenglycols of high molecular weight. Photo courtesy of GPB. 

Pemex Policies Shape Petrochemical 

Landscape throughout the Years 

Othón Canales, chairman of chemical 

distributor Quimi Corp, outlines the 

history of Pemex’s petrochemical developments 

and its impact on the private 

sector over the last three decades. 


At the time when Pemex invested in its 

first ammonia plant in the early 1960s, 

Mexico was a closed economy. When the 

ammonia and other products plants were 

built, the private sector immediately invested 

in downstream plants. This created 

a scenario unique to Mexico in which 

primary petrochemicals were made by 

Pemex and secondary petrochemicals 

were made by private industry. By the 

1980s Pemex was one of the main producers 

of ammonia in the world. As a 

result, the private sector was investing 

in more downstream capacity. Not long 

after, however, Mexico signed the General 

Agreement on Tariffs and Trade (GATT) 

in the early 1990s and eventually NAF- 

TA. With the opening of the economy, 

Mexico was flooded with petrochemicals. 

At this time the government decided 

to discontinue its focus on the petrochemical 

industry and stopped investing 

in Pemex’s petrochemical plants. This 

brought the private sector to a halt, as 

they were not able to back integrate raw 

materials. 

Under the regime of President Carlos 

Salinas, Pemex was broken into five independent 

entities (one corporate and 

four subsidiaries), which had negative 

implications for the private sector. The 

Ministry of Finance interfered with transactions 

between the subsidiaries and determined 

the price at which Pemex’s gas 

was sold. The price of gas was based on 

the price of gas in Texas and adjusted for 

freight and transportation cost. Immediately 

the price of gas soared in Mexico 

and Pemex decided to shut down its ammonia 

plants. Urea producers in Mexico 

lost their source of ammonia and CO2 

and many producers collapsed. Over 

these years there were only a few survivors 

in the private petrochemical sector, 

including Grupo Idesa, Alpek, Kuo and 

Mexichem. 

importer of these raw materials for the nearterm.” 

Private players harness the power 

of Pemex 

Pemex continues to play an influential role in 

the industry, supplying the main feedstocks 

to producers and consuming a majority of 

the industry’s output. As a result, weak performance 

by the global oil and gas giant in 

chemical sales, sustaining a 6.6% decline 

in 2013, is being felt further down the value 

chain. 

“When we started our facility six years ago, 

Pemex used to supply us with five very 

important raw materials. They have since 

stopped producing these products that we 

José Carlos Tapia Bueno, 


Trichem 



now have to get through importers. Today we 

import roughly 70% of our raw materials,” 

said Moises Preciado, general director of Barnices 

y Resinas. 

Grupo Petroquimico Beta (GPB), the only 

Latin American company producing hydroxyethyl 

cellulose, has its production plant in 

Coatzacoalcos, Veracruz, strategically situated 

in between Pemex Petroquímica’s Cangrejera 

and Morelos plants. “GPB receives a 

substantial portion of its feedstock through a 

pipeline that comes directly from the Pemex 

facility; this is a substantial agreement for us. 

We have developed a lubricant that takes five 

minutes to transport to Pemex which allows 

us to be very flexible in terms of our client offerings,” 

said Raúl Baz, president and general 

director of GPB. “Our goal is to start manufacturing 

more of the products that Pemex 

will need as it opens up at a better price than 

our competitors so that we can build on this 

relationship.” 

In order to combat rising imports, Baz at GPB 

advises companies focus on specialty petrochemical 

products destined for domestic use. 

“GPB has a very important R&D team based 

out of Mexico that receives 5% of our sales. 

They work on consistently developing the latest 

HEC products as well as other polymers. 

Mexico imports more petrochemical products 

than it exports oil, which is something 

that needs to change. The Mexican industry 

as a whole should move to manufacture 

more specialty chemicals that can be applied 

to the oil and gas sector, and we aim to adopt 

this strategy at GPB,” said Baz of GPB. 

Agrochemicals 

Mexico’s agrochemical sector is dominated 

by global players accounting for 70% of the 

market, followed by a highly fragmented 

market of small- and medium-sized companies. 

While consolidation has occurred in the 

last five years, significant potential remains 

for further merger and acquisition activity. 

Domestic and global players alike have been 

constrained by the introduction of 2004 regulations 

restricting production registration, 

while a growing focus on innovation presents 

opportunities for companies with R&D 

capability. 

As the global population increases, agrochemicals 

will play a more important role in 

agriculture. “In Mexico’s particular case, by 

the year 2050 our country will have around 

150 million inhabitants, who will demand a 

greater quantity of food,” says Maria Eugenia 

Villanueva, executive director of Mexico’s 

largest crop protection association PROC- 

CYT. “Our industry plays a fundamental 

role supporting agriculture to increase production, 

cover the food needs of a growing 

population and reduce the dependency on 

importing food from abroad. Without the use 

of agricultural consumables supplied by our 

industry, productivity of all types of crops, including 

conventional, hybrids, transgenic and 

even organic, will be reduced up to 40%.” 

Strict regulations spur market alignment 

Since product registration regulation for 

agrochemicals was changed in 2004, the 

process has beleaguered the industry. While 

José Escalante, president 

of Velsimex and vice 

president of agrochemical 

association UMFFAAC 

companies both international and local in 

scope have struggled with these regulations, 

which have been described as unclear and 

lacking transparency, domestic manufacturers 

have been most affected. Overtime, political 

opposition to the sector has taken its 

toll on production. 

“In Mexico registration is done through 

the Federal Commission for the Protection 

against Sanitary Risk (COFEPRIS), which is 

part of the Ministry of Health. There is political 

opposition to agrochemicals within 

the government driven by the Green Party 

and they are not issuing any permits or registrations, 

which has brought the industry 

to a standstill,” said Gregory Polak, general 

director of Grupo Polak, whose subsidiary 

Polaquimia manufactures agrochemicals. “In 

agrochemicals Polaqiumia is the only company 

in Mexico that is still manufacturing molecules 

for agrochemical active ingredients. 



9

We were the first company and now the last,” said Polak. 

Although updated regulations were issued in 2010, the process remains 

prohibitively costly for many companies in the market. Yet this 

cost is necessary to ensure the safety of the industry’s products, 

argues José Escalante, president of Velsimex and vice president of 

agrochemical association UMFFAAC. “The new regulations are great 

improvements when compared to the previous. Velsimex understands 

that the market needs to be regulated as the general public is 

consuming many of our products but there also has to be incentive 

to make money. The new regulation is much more balanced,” he said. 

With regulations now slightly more in check, agrochemical manufacturers 

in Mexico are focused instead on staying competitive in a rapidly 

consolidating global industry. 

FMC Corporation announced late this year that is would acquire 

Cheminova, the Denmark-based crop-protection company 

for $1.8 billion. Both companies have significant footprints in Mexico 

and their integration will commence when the sale is completed 

in the early 2015. This is the second major agrochemical deal of 

the year affecting Mexico after Chemtura announced it would sell 

its agrochemical business to Platform Specialty Products Corporation 

in early 2014. 

Within the domestic market, producers are further squeezed by 

raw material availability. “Since 2009, the government has closed 

all semi-official companies that were supplying raw materials used 

to manufacture urea, ammonia, and phosphoric acid, which are very 

necessary for agriculture. This has led to Ibarquim having to fight for 

prices,” said Julián Ibarlucea, general director of Grupo Ibarquim. 

With Grupo Polak’s Polaquimia subsidiary one of the remaining active 

ingredients manufacturers in the Mexican market, agrochemical manufacturers 

are starved for raw materials. Without the option of relying 

on global networks as do the sector’s multinational heavyweights, 

domestic producers are seeking creative value chain solutions. “The 

key strategy to stay competitive is to import active ingredients. By 

doing business in China, you can reach the same low costs of multinationals 

and large domestic companies for active ingredients,” said 

Juan Manuel Ramírez, general director of Internacional Química de 

Cobre (IQC), which produces fungicides, insecticides and herbicides. 

“Beyond imports, smaller domestic companies like IQC also benefit 

from our structures. Compared to multinationals that have very large 

staffs, we can be more flexible and efficient.” 

On the other end of the supply chain, Velsimex is looking to take advantage 

of Mexico’s geographic position in order to become a top global 

player. “Velsimex is currently looking at Africa and Asia as potential 

markets but Latin America currently presents a very interesting market. 

Mexico has many shared idiosyncrasies with these countries and 

with the many trade agreements that exist between Mexico and these 

countries, the potential for Velsimex is truly great,” said Escalante. 

Innovating to feed a growing economy 

Expanding the sector’s in-country innovative capacity is crucial as 

Mexico’s small landowners face climate constraint and market 

consolidation. “Farmers are always looking for better quality seeds 

both in terms of yield and disease resistance. Roughly 75% of Mexico’s 

area is reliant on rainfall for its irrigation, which can affect the 

crops, climate and yield depending on whether there is an excess 




Juan Manuel Ramírez 

Muro, general director, 

IQC 

of rainfall or a drought,” said Manish Sirohi, 

general manager at United Phosphorous de 

México. 

Companies are tapping into this need for innovation 

with investments in research and 

development capacity specifically within the 

Mexican market. United Phosphorus’s subsidiary 

Advanta will be establishing an R&D 

center in Mexico this year, while Syngenta 

will be investing in a Seed Care Institute in 

Jalisco to provide services in seed safety 

testing, treated seeds analysis, and formulations 

development and application. 

Yet introducing new technologies to the market 

can be challenging in a fragmented market. 

“The use of technology remains regional 

here in Mexico with the majority of farmers 

on the Pacific coast, mainly Sinaloa and Sonora, 

utilizing technology in their processes. In 

the middle of the country as well as towards 

the southeast, the adoption of technology in 

farming practices remains low,” said Ibarlucea 

of Grupo Ibarquim. 

Many small-scale farmers do not have access 

to new technologies or the funds to implement 

them. Without government support, 

this is unlikely to change in the short term. 

“Currently there is a huge demand for maize, 

sorghum and rice, but Mexico only produces 

22 million mt of maize annually, while it 

consumes 31 million mt/y. Rice farming areas 

have dropped by half, with production 

at around 180,000 mt/y and consumption 

at 1,000,000 mt/y,” explained Sirohi of United 

Phosphorous de México. “This needs 

to change. The government must take initiatives 

in providing both credit and education 

to meet these needs. The private sector has 

been attempting to do this, but it cannot and 

should not be held responsible for this on its 

own. Public-private partnerships will be key in 

making this change,” continued Sirohi. 

Faced with the lower purchasing power of 

small agricultural producers and low agrochemical 

prices from multinationals, players 

such as IQC have taken further innovative approaches 

to developing their value chains. In 

a partnership with the mining company VES 

Capital Partners, IQC is developing the Veta 

Grande silver-copper project as a mine with 

on-site processing and refining capacity. “We 

plan to continue this model in the future and 

acquire various mining projects to put into 

operation. The copper we are mining we can 

then refine into copper sulfate and use for 

IQC’s production, making our business more 

vertically integrated” said Ramírez of IQC. 

Paints and Coatings 

Latin America, previously a supplementary 

market for many paints and coatings producers, 

is quickly shifting to the forefront of corporate 

strategies. 



11


Transactions spike amidst optimism 

A number of high profile mergers and acquisitions 

have taken place in the last 18 months, 

indicating an attractive and active sector with 

significant growth potential. In the last year, 

industry leader Mexichem purchased Poly- 

One’s specialty vinyl dispersion, blending, 

and suspensions resin facilities in Ohio for 

$250 million, while Axalta Coating Systems 

is expanding capacity within Mexico with a 

$10.5 million investment in their Tlalnepantla 

facility for transportation coatings. 

Chemical giant DuPont, which has had manufacturing 

in Mexico since the early 1950s, 

is in the process of a global divestiture of its 

performance chemicals segment. The $7 billion 

per year unit will be spun-off, and follows 

the 2013 sale of the giant’s automotive coatings 

business to Carlyle Group, which today 

is Axalta. 

Global paint supplier Sherwin-Williams has 

set its sights on Latin America as a major 

growth market, taking advantage of Mexico’s 

proximity to the US market by headquartering 

its new Latin American coatings group 

in Mexico City. “The protective and marine 

industries are growing very fast; considering 

the new regulations surrounding those areas, 

Sherwin-Williams is hoping to see the 

most growth there,” said Gerardo Gurrola, director 

of research and development at Sherwin-Williams 

Mexico. 

Sherwin-Williams’ decision to invest in a 

regional coatings group follows a thwarted 

attempt to acquire family-owned Mexican 

paints giant Comex. A 2012 bid by the company 

to buy Comex would have doubled their 

Latin American business but was rejected 

due to antitrust issues. 

Comex has proved an attractive target, as a 

Maggie Flor Gómez, 


Charlotte Chemical 

AP plant located in Queretaro, Mexico which develops high quality water and solvent based products. 

Photo courtesy of AP. 

new acquisition deal was announced in June 

2014, this time with PPG Industries as the 

buyer. PPG Industries’ acquisition of Comex 

is currently under review by Mexico’s Federal 

Economic Competition Commission. A decision 

on the transaction, valued at $2.3 billion, 

is expected in the fourth quarter following an 

October extension made by the commission. 

“PPG is not strong in the architectural market, 

which is our strongest point in Mexico, 

so we see great opportunities for synergy 

there. They also do not have any operations 

in this part of Mexico, so we are looking to 

work with them in this regard. We are also 

hoping to take advantage of their knowledge 

and experience with industrial OEMs 

to expand our network in that market,” said 

Alejandro Morones, vice president of global 

research and development at Comex. 

Synergies with the US market are growing 

among Mexican paints and coatings providers, 

with Comex subsidiary AP, a producer 

of resins, now eyeing the market for expansion. 

“In the past, we focused our exports on 

the Latin America market, but more recently 

there has been a shift in the market and we 

are examining the United States as a potential 

expansion area,” said Luis de Vecchi, national 

director of sales at AP. 

Towards a more specialized 

and greener industry 

Along with the growing revenues of paints 

and coatings businesses in Mexico, producers 

are also responding to a demand coming 

from the market for better products. “Mexico 

is seeing an increase in technology and 

higher quality of paints and products,” said 

Samuel Troice, general director of Pinturas 

Acuario. 

Particularly for Mexico’s fast-growing and 

export-focused automotive and aeronautic 

industries, finding international-standard local 

materials is key. “The coatings industry 

is growing much faster with the introduction 

of numerous specialty products for the energy 

sector and the automotive industry. There 

have been a growing number of parts manufacturers 

coming to Mexico that can provide 

an expanded market for us. Companies are 

very interested in trying new technologies 

and developing new products as the market 

matures,” said Maggie Flor Gómez, general 

director of chemical distributor Charlotte 

Chemical, and president of the chemical distribution 

section at ANIQ. 

The energy sector reforms are also opening 

up opportunities for advanced paints and 

coatings products. “PEMEX and CFE are going 

to start building new power plants as a 

part of the energy reforms. The kinds of coatings 

these will require are completely different 

than what we already produce, and this 

change is exciting to us,” explained Gurrola 

of Sherwin-Williams. 

“At the same time, the average customer 

has changed. Price is no longer the main 

issue; environmental friendliness, performance, 

and quality are all drivers for improvement 

in the industry to keep up with 

changing demand,” added Gómez of Charlotte 

Chemical. 






13


With growing interest in environmentally-friendly 

products, companies are adjusting 

their product lines to meet consumers’ 

increasingly stringent sustainability requirements. 

“The industry needs more green 

products. This is an idea that Comex has embraced 

recently, starting with the removal of 

lead from our paints. Being a larger company, 

it is easy for us to institute this change, and 

we are hopeful that others will follow,” said 

Morones of Comex. 

Specialty chemicals 

While the specialty chemical sector does 

not stand to benefit from Mexico’s energy 

reforms as directly as petrochemical producers, 

the market has nevertheless grown in 

recent years on the back of increasingly specialized 

sectors. Multinationals have found 

an expanding market for their specialty solutions, 

while both domestic producers and 

distributors are positioning themselves to 

take advantage of these growth opportunities. 

With margins for commodities increasingly 

shrinking, specialties are a robust solution 

to the challenging quest for profitability. 

Specialties wanted: Mexican 

manufacturing fuels growth 

In August, Mexico surpassed Brazil to garner 

the title of seventh largest automotive 

producer, on top of its rank as the world’s 

fourth largest exporter. OEMs are flooding 

into the country with a focus on high-end vehicles, 

including BMW, Kia, Mercedes-Benz 

and a joint venture between Renault-Nissan 

and Daimler. Conscious of this golden opportunity, 

Mexico’s chemical manufacturers are 

gearing up their specialty divisions to meet 

the needs of these luxury vehicles. “Mexico 

is becoming a key market for our products in 

the automotive manufacturing sector, which 

is growing very fast. The boom in the automotive 

industry is one of the most important 

expectations that we have in 2015 and the 

coming years,” said Álvaro Galindo, sales 

manager for Dow Corning de México. 

Dow Corning’s products for the Mexican automotive 

sector are targeting performance 

improvements such as reducing noise, vibration 

and harshness; long-term lubrication 

and extreme temperature resistance. The 

Mexican Association of the Automotive Industry 

(AMIA) forecasts Mexican automotive 

production reaching 4.5 million vehicles by 

2020, up from an expected 3.2 million vehicles 

for 2014, meaning the market has huge 

growth potential for chemical suppliers. 

EIQSA, a PVC compounding company founded 

in 1954, like many of its counterparts is 

making the automotive sector a key focus for 

research and development activities. “Our 

main plan is to be more present in the automotive 

industry, which is growing very quickly 

in Mexico,” said Ezra Bejar, deputy director 

general of EIQSA. “The aeronautical industry 

is also growing in Mexico and we are looking 

to penetrate this market with our materials, 

specifically in compounds.” 

Specialty giant Eastman, which grew from 

an import office in the country to owning two 

plants in Mexico via its global acquisitions, 

now derives a significant portion of its Latin 

American business from Mexico. “Mexico 

represents a significant portion of Eastman’s 

Latin American market,” said Juan Carlos 

Parodi, vice president and managing director 

of Latin America at Eastman. “We have very 




Eastman’s Uruapan Manufacturing Site. Photo courtesy of Eastman. 

diversified markets that we work in, with a key focus on the automotive 

sector, building and construction and industrial intermediates.” 

Global specialties company Evonik has manufactured chemicals in 

Mexico since 1968 and expects manufacturing to remain the company’s 

main focus in Mexico in spite of the expected changes coming 

to the market. “The Mexican population will have more buying power 

and will consist of a larger middle class that is able to afford higher 

value products. These shifts in the market will lead to more opportunity 

for Evonik requiring more specialty chemicals and products,” said 

Bachmann of Evonik Mexico. 

Evonik Mexico is planning to partner with Grupo Idesa through its 

100%-owned subsidiary CyPlus GmbH in a joint venture for the construction 

of a 40,000 mt/y capacity sodium cyanide plant in Coatzacoalcos. 

“This sodium cyanide plant will utilize cutting-edge technology 

in order to produce a raw material that is currently imported into 

Mexico. The market in Mexico continues to grow in an interesting 

way, and this partnership will yield substantial production over the 

next few years,” said Bachmann of Evonik Mexico. 

Mexico’s potential as an innovation hub 

As opportunities for specialties growth emerge from automotive and 

aerospace manufacturing, specialty players are also hopeful that the 

energy market will soon become more innovative as Pemex transforms. 

With Pemex looking to be more profitable and private oil and 

gas investors coming in, Mexico has the potential to become a center 

of excellence for energy-focused performance chemicals. 

“With the new reforms, many players will have the opportunity to 

offer new technologies and products. For Dow Corning, we are focusing 

particularly on our products that have applications in the oil 

and gas industry. Our silicones are very well-recognized for their high 

efficiency in antifoams and demulsifiers,” said Galindo of Dow Corning 

de México. “We plan to develop synergies with service providers 

to Pemex by offering new technologies and improving the productivity 

in Pemex. 

For global specialties giant Clariant, its modern ethoxylation plant 

located in Coatzacoalcos is 2 km from Pemex’s ethylene oxide facility, 

which makes the Clariant facility one of the company’s stronger 

manufacturing sites for ethylene oxide derivatives. At its Santa Clara 

complex, Clariant has applications labs, a distribution center and a 

multi-business site with productive plants belonging to pigments, 

masterbatches and industrial and consumer specialties. Its Puebla 

production site also houses laboratories for its functional minerals 

business unit. 

While multinationals and large domestic players are relying on 

their global R&D centers and deeper pockets, innovation is occurring 

on smaller scales thanks to cross-industry partnerships and 

collaboration with institutions. “Unfortunately, the government does 

not provide enough incentives to promote innovation; this comes 

from within the industry. Most companies here reinvest their 

profits to fund expansions and research, which becomes difficult for 

smaller companies like Macropol,” said Eloy Cordero, general director 

of Macropol. “The current reforms are a step in the right direction, 

First run on extruder. Photo courtesy of Macropol. 



15


GPB’s plant inside the Coatzacoalcos 

Industrial park. Photo courtesy of GPB. 

Carving a niche in water treatment in Mexico 

With high expectations in Mexico’s energy 

sector, producers and service providers 

for the water treatment market are 

preparing their offerings to meet this eventual 

growth. With global players expected 

to come in, along with their international 

standards, the market is readying itself 

for an uptick in demand for specialized 

solutions. 

SNF Floerger, a France-based provider 

of water soluble polymers and the largest 

global producer of polyacrylamides, 

views the country as a key market for marketing 

its products. “Today, Mexico is the 

biggest country in Latin America in terms 

of the market for water soluble polymers, 

with the polyacrylamide business worth 

$100 million a year,” said Rubioof SNF 

Floerger. 

For ChemTreat, a US-based water treatment 

company, demand for their products 

and services within Mexico’s chemical 

industry has been flat; however the company 

still counts among its clients some 

of Mexico’s large chemical players, providing 

water treatment services to the Pemex 

and Mexichem propylene joint venture, 

while also working with DuPont at their 

expansion in Tampico and with Mexichem 

again at Matamoros. 

As water treatment chemicals within 

the chemical sector specifically have not 

seen much growth, suppliers are looking at 

niche markets to apply their expertise. “We 

are very active in specialties such as home 

care and personal care. These specialties 

are driving the growth of the business here 

in Mexico,” said Rubio of SNF Floerger. 

The most promising applications for such 

specialties are in Mexico’s oil and gas 

market. The energy reforms have already 

prompted plans to enter the market for many 

of ChemTreat’s customers. “We have a 

lot of customers in the United States that 

are planning to come to Mexico with whom 

we already have corporate agreements. 

We also plan to eventually do business 

with Pemex,” said Raúl Morales, director of 

ChemTreat Mexico. 

SNF, which is making considerable investments 

into its chemical production facilities 

in North America, is also targeting the 

oil and gas market, creating polymers for 

Gulf Coast projects. When Mexico’s energy 

sector will partake in this North American 

boom remains a matter of debate. 

“In Mexico, this kind of growth is expected 

in the next five to ten years as investments 

are made in shale gas and offshore oil. 

We will not see the impact of the structural 

reforms for another five to 10 years. If the 

market evolves as expected, Mexico’s consumption 

of these kinds of chemicals will 

increase quickly,” said Rubio. 

As Mexico’s market grows and becomes 

more sophisticated, water treatment suppliers 

are looking to innovation to reduce 

safety risks and service costs. 

“We are offering smart release technology 

to our customers, which uses pellet chemicals 

instead of liquid chemicals. By packaging 

the chemicals in a bag in pellet-form 

and not in barrels, humans do not have to 

touch the chemicals and there is no chance 

of spills. It is a secure method that can be 

delivered through DHL or UPS and is biodegradable 

and phosphorous-free,” said 

Morales of ChemTreat. 

Speaking to the crucial importance 

of recycling water, SNF Floerger is devoting 

resources to developing new 

technologies. “There are many technologies 

like graphene, ultra filtration, and nuclear 

energy that will help us to treat water 

at lower costs. This is a focus for chemical 

companies right now because we have 

less and less water available from wells,” 

said Rubio of SNF Floerger. “Companies 

require intensive water consumption 

and must recycle as much as they can.” 



ut it will be some time before we see government-funded 

innovation here.” 

In the absence of adequate government support, 

agile domestic players are consulting 

academic and research institutions to leverage 

their chemical expertise. “Resymat has 

an important agreement with the National 

Autonomous University of Mexico (UNAM), 

whose graduates with doctorates and master’s 

degrees we have working in our plants. 

We also have a partnership with Tecnologico 

de Monterrey focused on plastics. In addition 

to academic partnerships, we also have 

agreements with research companies such 

as Ciqua and Ciateq,” said Aldimir Torres, 

commercial director of Resymat, a market 

leader in polyester polyols. 

Going forward, Mexico’s potential to become 

a regional center for innovation in 

the chemical industry will depend upon 

Mexican companies taking a similar approach 

to research and development. 

Furthermore, as de Vecchi of AP predicts, 

the country’s strong demographics will 

prove to be a significant advantage. “Mexico 

is poised to become a leader in innovation. 

Never before in the history of Mexico have 

we had such a demographic balance where 

50% of the country’s population is less 

than 25 years of age. The country’s young 

people will help Mexico to become an innovation 

hub, providing products and solutions 

that will be used around the world,” said 

de Vecchi. 

Distribution 

As consolidation occurs on a global scale for 

chemical distribution, growth opportunities 

are heating up for remaining players. On a 

regional scale, Latin America saw chemical 

distribution growth rates of 8.6% according 

to a recent report issued by the Boston Consulting 

Group. Within the Mexican context, 

on top of this growth chemical distribution 

enjoys a vital importance to the industry’s 

value chain. 

Consolidation breeds fierce competition 

As the trade imbalance persists for Mexican 

chemicals, distribution will continue 

to play a crucial role in the industry’s value 

chain. “Mexico continues to rely heavily on 

imports, as is evident by the 10% growth in 

imports annually, which is the result of growing 

demand for materials but flat domestic 

production,” said Tapia of distributor Trichem. 

“There is a net deficit of production close to 

$20 billion. Relative to the size of the industry, 

the chemical distribution market is huge,” 

added Othón Canales, chairman of the board 

of directors at Quimi Corp, a Mexican-based 

Latin American chemical distributor. 

In recent years, as chemical consumption 

continues to grow, the distribution market 

has attracted the attention of multinational 

distributors who are increasingly identifying 

Mexico as a prime target for expansions. 

Multinational interest has manifested itself 

in significant market consolidation as interna- 


Photo courtesy of DVA. 

tional distributors are entering the market by acquiring local players. 

“In the early 2000s, the top ten chemical distributors in Mexico were 

all family-owned companies. Today it is a new world where big multinationals 

like Brenntag and Univar are acquiring more businesses,” 

said Johnny Silva, managing director of Disan Mexico, the Colombia-based 

Latin American chemical distributor. 

As a result, much of the distribution business has been transferred to 

the accounts of very few. This is in line with global trends, as chemical 

manufacturers are increasingly rationalizing their distribution 

channels. “Today, six or seven companies control approximately 30% 

of the market,” said Ison of Química Delta, one of the last remaining 

distribution leaders that is family-owned. 

Remaining players in the market are either international companies 

with aggressive growth plans or small, specialized distributors. “The 

distribution space in Mexico is a very fragmented one. The top few 

are very focused on commodity-type products, with the rest focused 

on a variety of products and services to support the industry. There 

are 80 registered distributors within ANIQ, but perhaps over 100 

including those who are not registered,” said Arturo Hoyo, country 

manager of Nexeo Solutions. 

Market consolidation is showing no signs of stopping as global companies 

like Nexeo are continuing to enter Mexico and looking for fast 

growth. “It is a large but somewhat disorganized market. As such, 

there are a number of distributors ready for partnerships in the interest 

of consolidating and combining efforts. Nexeo’s strategy is not 

about expanding our footprint so much as it is about improving our 

offering, so we have to conduct a very careful assessment of any 

potential partners. Not every company is a viable option for partnership, 

but we do see immense potential as we evaluate the market,” 

added Hoyo. 

Taking control of the supply chain 

To combat the fierce competition driven by a shrinking playing field, 




chemical distributors are finding more ways 

to participate in the value chain, whether it is 

increasing value added service offerings or 

moving fully into production. 

Mexican specialty chemical distributor Macropol 

has responded to the quickened evolution 

of the market by adding in production capability. 

“Since 2007, we have been running 

a factory to produce chemical products as 

well; the idea is to support our commercial 

lines with this. In the past, products evolved 

every 20 to 25 years. Today the rate is much 

faster. Macropol’s activity is currently split 

70% distribution and 30% production. Our 

goal is to increase production to between 

50% and 60% by 2016,” said Cordero of 

Macropol. 

Pursuing a similar strategy, distributor 

Trade Chemicals is currently manufacturing 

and importing products in equal measure. 

“We hope to increase our manufacturing. 

The most important products for us are silicon 

emulsions, which are used in many 

markets,” said Miguel Valdivia, commercial 

director at Trade Chemicals. “A number of 

distributors are moving into manufacturing, 

which is a smart way to develop the supply 

chain. Overall, this move means better prices 

and increased competitiveness with other 

companies. We also have more control over 

the quality of our products when we are producing 

them since we know how they are 

made.“ 

While specialty chemicals and niche materials 

have traditionally been left to small 

players, Mexico’s leading distributors are 

increasingly targeting specialties for growth, 

putting further pressure on small and medium-sized 

companies. 

Química Delta, which is aiming to increase 

its specialties and differentiated products 

business from 40% of overall sales to 60%, 

joins a rank of larger distribution players 

aiming to grow through specialties. “In the 

context of the market consolidation, it is important 

to find ways to add more value for 

our customers. This can be achieved not only 

through a focus on specialties but on products 

with higher value added in general,” said 

Ison of Química Delta. 

Colombia-headquartered distributor Disan 

has been in the Mexican market for ten years 

and is also targeting specialties for growth. 

“Disan has put a bigger focus on specialty 

products where there is room to grow 

and larger margins,” said Silva of Disan. 

“Large chemical manufacturers want to focus 

on their production, R&D, and key customers. 

This creates more and more opportunities 

for distributors to add value into the 

supply chain.” 

Taking advantage of global supply 

networks 

Only twenty years after NAFTA opened 

up Mexico’s markets to the world, chemical 

distributors are taking full advantage 

of Mexico’s geographic positioning and numerous 

free trade agreements to optimize 

their sourcing networks. Increasingly even 

domestic companies are opening branches 

in key markets around the world to find better 

prices and quality. “Charlotte Chemical 

has an office in San Antonio, which is mostly 

strategic. Most of our products are imported. 

Two percent of what we sell is locally 

produced, with the rest coming from 

the United States, the United Kingdom, 

India, China and Japan. Until the current 

reforms take effect, we will continue 

to import. We aim not to compete 

with local producers, so we sell things 

that are not available here,” said Gómez of 

Charlotte Chemical. 

Charlotte Chemical is one of many Mexican 

distributors scouring the globe, with many 



19

Martin Sack, general 

director, Leschaco 

looking to China as the country’s reputation 

for quality improves. “More distributors 

are bringing items from China because the 

quality is getting better, but not in all cases. 

You have to be very selective in what you import 

from China. We were the first company 

in Mexico that imported products from China 

for the textile industry. In every case we have 

to double check the quality of the products, 

which involves asking for all of the specifications 

and certifications from companies 

before we start doing business with them,” 

said Salvador Solodkin, president of Mexican 

chemical distributor Materias Químicas de 

México (Maquimex). 

This global strategy succeeds in price competition 

and is enjoying greater acceptance 

in the market. “Five years ago, quality 

control would have been a major concern 

for us when working with companies in 

Asia. Nowadays, we are happy to say that 

suppliers there are equally as reliable as 

their European or American counterparts,” 

said Alonzo Autrey, general director of DVA 

Mexicana. 

Infrastructure and logistics 

As Mexico deepens its ties with global 

markets, logistics are increasingly affecting 

the industry’s bottom line. Covering large 

distances across the country and managing 

shipments in Mexico’s increasingly globalized 

economy has put stress on both 

manufacturers and distributors. As a result, 

the role of third party logistics is growing in 

the market, along with distributors who are 

stepping up to the logistics sphere. 

Infrastructure upgrades in the pipeline 

One of the key challenges facing the industry 

from a logistics perspective is the need for 

updated transport infrastructure, particularly 

when it comes to links between its biggest 

trading partner the United States. According 

to 2012 data, 77.5% of Mexican exports go 

the United States, yet transporting across 

the border remains costly. 

“The price of raw materials and logistics 

continues to be a major problem here in 

Mexico. The government has abandoned rail 

freight and instead continues to transport 

everything by road. This means additional 

costs for distributors,” said Ibarlucea of Ibarquim. 

This additional cost comes from road and rail 

networks that cannot support the volumes 

that need to be transported. “We have an 

insufficient highway network and we need 

a better railway system. Rail has huge potential 

for the chemical markets, and some 

chemical industry customers are using 

the railways for long-distance transport 

into the United States. We would like to 

see more railway development inside Mexico 

to improve efficiency when it comes to 

time, flexibility and costs,” said Martin Sack, 

general director of Leschaco Mexicana. 

A national infrastructure plan unveiled in 

April 2014 has laid out a plan for $590 billion 

of public and private infrastructure investment 

between 2014 and 2018. The plan 

is an update to a 2013 predecessor that had 

outlined $340 billion, and is heavily focused 

on improving communications and transport 

for the energy sector. With 6 of every 

10 pesos to come from the government, 

the developments will depend on the 

ability of the public sector to tackle this ambitious 

plan. 

“We are optimistic that Mexico overall has a 

unique strategic geographic position. If our 

government puts these programs into place, 

we will have a very positive future in Mexico,” 

said Sack of Leschaco Mexicana. 

Upgrading capacity at Mexico’s airports 

and ports will also be necessary going 

forward, as importers and exporters encounter 

delays at these hubs. DVA Mexicana, 

the Mexican subsidiary of German distributor 

DVA, relies heavily on Mexico’s logistics 

infrastructure, as the company imports the 

majority of its products from China, India and 

Europe for use in Mexico’s pharma, food, 

industrial and specialty markets. While delays 

occur often at points of origin, because 




of the heavy volumes of products being imported 

to Mexico, DVA Mexicana argues that 

port processes are sufficient to keep their 

business running on time. “In our experience, 

within Mexico the logistics framework is suitable 

for our needs, but the biggest problem 

we face is when vessels coming from abroad 

do not arrive on time. This happens a lot with 

vessels from China; given the demand they 

have, their freight needs are always changing. 

This makes it logistically quite challenging to 

coordinate efficient and timely client deliverables. 

However, once products reach the ports, 

we have no issues,” said Autrey of DVA 

Mexicana. 

Finding solutions to logistics bottlenecks 

To meet the challanges, the logistics industry 

has boomed in the last 15 years 

in Mexico. Leschaco, one of the first foreign 

players to arrive in Mexico, noted that 

the industry has multiplied thanks to small 

and medium-sized local companies entering 

the market. “When we arrived in 1998, 

there were about 80 companies in freight 

Photo courtesy of Leschaco Mexicana. 

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21


Cargo Group International’s operations team moving a tank from Altamira to Navolato, Sinaloa. Photo courtesy of Cargo Group International. 

forwarding. Fifteen years later we have 

more than 300 companies and another 300 

to 400 indirectly linked to the market. More 

international players have come in, and small 

and medium-sized national companies have 

been established. Today Mexico has as 

completely a developed open market as in 

Asia and Europe,” said Sack of Leschaco. 

To help clients better optimize their supply 

chains, logistics companies are dedicating 

more specialized attention to specific client 

needs and taking advantage of technological 

innovations to improve service offerings. 

“Especially in Mexico, we are developing 

in-house and in-plant presence with our 

employees. We already have Leschaco 

employees present in seven companies in 

Mexico working directly with customers. 

Leschaco is taking more and more control 

of the supply chain and implementing key 

account management activities, so our customers 

can focus on their core businesses,” 

said Sack of Leschaco Mexicana. 

The need for specialized attention stems 

from challenging customs procedures that 

many manufacturers are not equipped to 

handle. “After Brazil, Mexico has the most 

Mexico’s Economic Outlook 

Ildefonso Guajardo Villareal, Secretary of the Economy 

of Mexico, comments on the country’s growth potential 

The bank of Mexico has cut its forecast 

for this year’s GDP growth from 3% to 

4% down to 2.3% to 3.3%. What are 

the reasons behind this anemic growth? 

The Mexican economy is highly integrated 

to the global economy. Our ratio of total 

trade to GDP is approximately 66%. 

This makes our economy highly susceptible to 

economic fluctuations outside of Mexico. Looking 

at the internal factors, 2013 saw the transition 

to the new government, and it was necessary to rethink 

how entire systems were managed. 

Today, the economies of our main trading partners are in 

much better shape and our own domestic policies are better 

structured. As such, we are expecting to see stronger growth in 2014 

than we saw last year. 

There is a split between Mexico’s large formal network of businesses 

and informal small and medium enterprises (SMEs). How 

does the government aim to address this? 

Twenty years ago we integrated our country into the global market 

and signed the North American Free Trade Agreement (NAFTA). Since 

that time, we have multiplied our exports by seven and FDI inflows 

have increased fourfold. At the same time, both inflation and interest 

rates have come down. However, none of this translated 

into strong growth for Mexico because the underlying 

mechanisms governing how business operates 

were in dire need of reform. 

The structural reforms aim to level the playing 

field for all businesses. One goal is to provide 

a regulated economy in which SMEs have access 

to more competitive financial resources 

and cheaper energy. 

Where will the Mexican economy be three 

years from now? 

The main target of President Peña is 

to reinstate the possibility of 5% to 6% 

growth by the end of his term. All of our economic 

policies are geared to stimulating growth. 

He has acknowledged that a dichotomy exists between unproductive 

SMEs and dynamic modern industry, and his policies aim to redress 

this situation. At the end of the day, we must increase productivity. 

This will be accomplished by incentivizing productive organizations to 

expand and by helping low productivity organizations become more 

sophisticated. 




complicated customs requirements in the 

world, and we are able to place people inhouse 

with clients to ensure that their equipment 

is transported seamlessly into and 

around the country,” said Mauricio Boy, president 

and CEO of logistics provider Cargo 

Group International. 

Distributors looking to gain an edge in the 

market are also focusing on expanding their 

logistics capabilities. One of Mexico’s largest 

chemical distributors, Alveg, is the only 

distribution player in the market to invest 

in its own maritime terminal. “We always 

deliver products with our fleet of 200 units 

controlled by satellite tracking. A problem 

that we see in the short term for the country 

is storage capacity,” said Rodolfo Ramírez, 

general director of Alveg. 

With a clear vision from the government 

to expand transport capacity, the private 

sector will need to support these plans 

and follow suit with storage capacity 

expansion. 

Conclusion 

While challenges lie ahead for the industry in 

the form of tough regional competition and 

a transforming economy in the wake of the 

historic reforms, Mexico’s chemical industry 

has the potential to not only return to its 

levels of decades past, but also to become 

a leader in the chemical landscape of the 

Americas. 

Close collaboration between the government 

and the private sector will be crucial 

to the industry’s ability to leverage the new 

reforms into a growth opportunity. “The 

United States is experiencing a boom and 

business is beginning to return to North 

America, presenting an amazing opportunity 

for Mexico. You need to look beyond how 

the reforms affect the oil and gas industry 

and also consider how they impact the entire 

value chain,” said Tapia of Trichem. “In order 

for the government to fully achieve success 

it remains vital that it coordinate with the 

private sector to implement and draft longterm 

plans and also assure that objectives 

are defined.” 

Beginning with petrochemical expansion, 

cheaper and more available raw materials 

can trickle down stream. The startup of Braskem 

Idesa’s Etileno XXI project is a first step 

that could launch further investments up and 

down the chemical value chain. 

“Five years from now, Grupo Idesa plans to 

be in the expansion phase of our projects,” 

said Uriegas of Grupo Idesa. “The reforms 

are a powerful step in allowing greater access 

to feedstock, a necessity in increasing 

production in the future.” 

A focus on locally-made raw materials, 

coupled with a distribution sector made 

strong by competition and a growing base 

of international and domestic manufacturers 

focused on quality, the correct ingredients 

are in place for a robust sector going 

forward. With more active government 

support for research and development 

and training, Mexico can have what it takes 

to play a larger role in the global chemicals 

marketplace. • 

We would like to thank 

everyone who took the 

time to participate in the 

research we conducted 

while in Mexico City. 

Subsequent pre-releases 

will be issued in the 

coming months and 

the full report will be 

published in Chemical 

Week in March 2015. 

If you would like to 

be interviewed for the 

report as we continue 

to interview in Mexico 

City and travel the 

country meeting with 

those relevant to the 

chemical sector, please 

contact Josie Perez 

(jperez@gbreports.com). 

Mexico Chemicals 2014 

Journalist: Amelia Salutz 

Project Director: Josie Perez 

Editor: Mungo Smith 

Graphic Design: Leigh Johnson 

www.gbreports.com 



23

Mexico Chemicals 2014

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